OWN CORRESPONDENT, Johannesburg | Tuesday 1.15pm.
THE monthly inflation rate — measured as the rate of change of the consumer price index — rose 3,4% in March after rising 2,4% in February, Statistics South Africa said on Tuesday.
The rise is higher than expected and puts pay to expectations of interest rate cuts in the near future.
CPI-X for metro and other urban areas, the measure used by the Reserve Bank as its benchmark for inflation targeting, rose an annualised 7,4% in March versus 7,1% in February. The Bank aims to reduce the measure to between 3% and 6% by the end of 2002.
Core inflation rose 8,1% against a 8,0% increase in February. Core inflation is closely watched by the Reserve Bank as a key indicator of inflation as it excludes volatile price changes in prices for meat and fish, vegetables, fruit and nuts, interest rates on mortgages, overdrafts and personal loans, value added tax and municipal rates.
Commenting on the numbers, Standard & Poors’s James Rheeder said: ”The numbers are higher than the market expected. It’s the final nail in the coffin of interest rate cuts for this year. Core inflation at 8,1% shows there is inflationary pressure. If the government is taking inflation targeting seriously it cannot consider cutting interest rates this year.”
PSG Investment Bank’s Noelani King said: ”Overall, the figures are obviously bearish and not good for the interest rate outlook. I don’t think there is a risk of tightening now, rather think we will see a sideways move for the next few months. It certainly rules out hope for any interest rate reduction.” — Reuters